Just as the developing countries are opening up their economies to foreign investors, the increased intensity of international competition has pressured firms in the developed market economies to pursue outsourcing strategies and/or direct foreign investments in countries with low labor costs (Dunning, 1989). Others have seen no alternative but to locate in the developing countries or in the transitional economies of Eastern and Central Europe. As Dunning (1989) observes, these firms have become more footloose in their choice of location as their dependence on natural and immobile factor endowments has been reduced. There has also been a marked
increase in the adoption of a hybrid of cost-saving collaborative arrangements between firms in developed and developing countries (Borys and Jemison, 1989).